Selling the fantasy of celebrity chic

Candy-colored murals, featuring life-size images such as Princess Diana aglow in tiara and gown and a towering portrait of basketball deity Michael Jordan, adorn the entry walls at the Bannockburn, Ill. office of magazine publisher H&S Media. These splashy images celebrate some of the company's best-selling titles.

Founded in 1990 by Harvey Wasserman and Steve Keen, H&S has become a publishing force largely due to its focus on newsstand sales and celebrity selling power.

SALES SOAR

Nearly 75% of H&S' $50 million in sales are derived from newsstand sales, with the remaining 25% coming from subscriptions and advertising, according to company documents. In fiscal year 1997, tiny H&S had $15 million in sales; by 1998, sales had mushroomed to $25 million, and by the end of 1999, sales had doubled.

H&S continues to grow, having swelled from 60 employees at the beginning of 1999 to a staff of 150 by the end of that year.

"The difference between us and the standard [magazine] model is that others work on a model of how much advertising they can bring in," says Mr. Wasserman, who keeps a mere 20-80 advertising-to-editorial ratio in his monthly magazines. "We ask ourselves, `What will people want to read about that they can't get anywhere else?' "

Mr. Wasserman, a 58-year-old former circulation executive and the company's president-CEO, says one of the keys to successful newsstand sales is to be the first product on the market.

H&S has carved a niche for itself as a publisher of one-shot publications that capitalize on of-the-moment events, from Leonardo DiCaprio in the wake of Titanic to the St. Louis Rams after butting their way to an NFL championship.

KENNEDY SPECIAL BIG SELLER

These one-shot magazines are H&S' trademarked Gold Collectors Series Entertainment Magazines. The most successful of these, John F. Kennedy Jr.: Eternal Love, hit newsstands July 21, 1999, five days after John F. Kennedy Jr.'s untimely death. The one-shot, 96-page commemorative magazine, with a $5.95 cover price, sold 1 million copies of its 1.25 million print run in just 48 hours. For a small publisher, that compares favorably with Time Inc.'s People, which sold 1.6 million copies of its 100-page JFK Jr. commemorative issue.

The need for speed in the niche magazine industry can force the editorial team to work "around the clock" when dealing with a tragic event, Mr. Wasserman says.

"On Saturday, Kennedy was announced missing," says Mr. Wasserman, whose staff immediately starting churning out copy. "On Sunday, we contacted our photo sources. The magazine was ready Monday before we knew if he was dead. On Tuesday morning they announced his death, and Wednesday we were on sale."

DIANA TRIBUTE

Another highly successful post-mortem H&S title was A Tribute to Diana: In Our Hearts Forever, which was on newsstands within a week of Princess Diana's funeral. It sold about a half-million copies in seven days, says Mr. Wasserman.

"There's usually a proliferation of these [commemorative issues]," he says. "People have seen the news on TV and in newspapers. They want one to frame."

Magazine industry expert Samir Husni, chairman of the University of Mississippi's magazine program, talks about H&S with awe.

"A company like H&S is successful because they specialize not only in capturing the pulse of society, but also do it with quick turnaround," Mr. Husni says. "They are also willing to sacrifice time and effort to prepare more than one magazine, as they did with the Super Bowl, so they can be the first on the stands."

For this year's Super Bowl, the company had magazines ready to go for both contenders, St. Louis Rams and Tennessee Titans.

"With H&S, you name it, they are doing it," says Mr. Husni, "whether it's Beanie Babies or Ricky Martin [in Hot, Hot, Hot], a magazine which they produced in Spanish and English."

Hot, Hot, Hot, however, was not a publishing success, says Mr. Wasserman. It sold less than 300,000 of its 700,000 print run.

"Something we weren't cognizant of in the beginning," says Mr. Wasserman, "is that he was very popular with the Latino audience and had a charismatic following that didn't cross over in the heartland of the U.S. Even though his music crossed over, there's something about a magazine that's different. Our magazine did great mostly in Puerto Rico and Florida."

SINATRA EFFORT FLOPS

Mr. Wasserman learned another lesson about who buys magazines off the newsstand when he released a tribute one-shot after Frank Sinatra's death.

"When Mr. Sinatra died, we only sold 20%," Mr. Wasserman says. "To people under age 35 who buy magazines off the newsstand, he wasn't a hero. Our audience is between 18 and 35; they didn't have an affinity to Sinatra."

Mr. Wasserman accepts the occasional failure as a cost of doing business, just as he has had his share of personal stumbling blocks. After graduating from the City University of New York's Baruch School of Business, Mr. Wasserman couldn't land an advertising job. He went to work for General Electric Co. In 1969, he got a break and joined circulation company Charles Levy Co., where, as a VP-circulation, he was in charge of all major magazine distribution in Chicago.

By 1983, Mr. Wasserman had been let go and was working as a consultant. In 1986, with $200 in the bank, $800 in credit from his Visa card and $2,000 in consulting fees, he started ADS, a distributing company that is now part of H&S.

DRAMATICALLY GROWING

Today, H&S continues to grow dramatically, in no small part due to Mr. Wasserman's entrepreneurship. He is famous for his attention to the magazine covers, often using foil logos and embossing to catch the reader's eye.

"I believe we first have to attract people with our cover," says Mr. Wasserman. "We have to stand out. I spent all my life on distribution. You learn what sells."

Last year, the company released Pojo's Unofficial Pokemon Guide, a monthly, to capitalize on the Pokemon phenomenon, and WOW, which covers the world of wrestling every month. This year it launched How to Strike It Rich in the wake of ABC-TV's "Who Wants to Be a Millionaire" popularity. Its Mary Beth's Bean Bag World Monthly, licensed by Ty Inc., covers the Beanie Baby craze.

The magazines can be found in a range of retailers, from Barnes & Noble to 7-Eleven to Wal-Mart Stores. H&S Media even boosted to 20% the usual 10% promotional allowance offered to retail chains to give them an extra incentive for carrying the titles. The result: A 60% sell-through rate.

HIGH COVER PRICE

Mr. Wasserman says Bean Bag World and WOW sell 600,000 and 300,000 issues a month off the newsstand, respectively, despite their steep $5.99 cover price. Due to the low ad ratio (the magazines carry about 20% to 25% advertising, primarily from collectible distributors such as Collecticritters, UCC Distributing and Diamond Card Exchange), consumers get a lot of editorial material for their money, Mr. Wasserman says.

The executive uses his marketing expertise to promote tie-ins for his magazines. Some of his magazines may come bundled with bumper stickers and others with hair tattoos. Bean Bag World and the Pokemon magazine combine to sponsor an annual collectors' convention, and Bean Bag World also recently partnered with Walt Disney Co. to create Disney-themed bean-bag animals.

H&S recently participated in a mall appearance by teen singer Mandy Moore, who signed CDs at a suburban Chicago mall. Predictably, the teen sensation was the cover girl of H&S' monthly TeenStyle.

"We form a great many partnerships," says Marketing Director Paulina Brooks. "We seek out companies that can bring commodities to the table that we don't have."